KGF Development, LLC v. City of Ketchum

KGF DEVELOPMENT, LLC, PLAINTIFF-APPELLANT,v.CITY OF KETCHUM, A MUNICIPAL CORPORATION OF THE STATE OF IDAHO, DEFENDANT-RESPONDENT, AND 260 FIRST, LLC, INTERVENOR-RESPONDENT.

Appeal from the District Court of the Fifth Judicial District of the State of Idaho, Blaine County. Honorable Robert J. Elgee, District Judge.

The opinion of the court was delivered by: J. Jones, Justice.

2010 Opinion No. 92

The judgment of the district court is reversed.

KGF Development, LLC, appeals the district court‟s judgment in favor of the City of Ketchum. We reverse.

I. Factual and Procedural History

KGF owns units C1 through C12, 2, 4, 6, and 7 of the Copper Ridge Condominiums, which are located in the City of Ketchum (the City). Copper Ridge was built and developed with west-facing windows in its penthouse units in order to provide views of Mount Baldy. The maximum height for a building in the area where Copper Ridge was constructed was 40 feet. The penthouse units were expected to sell for around $3 million. KGF alleges that one of the major selling points of the penthouses was the view of Mount Baldy.

On February 18, 2008, the City passed Ordinance No. 1034 (the Ordinance).*fn1 One of the goals of the Ordinance was to preserve various properties in the City based on factors including size, historic character, and neighborhood cohesiveness. The Ordinance allowed for the transfer of development rights*fn2 (TDR) pursuant to Idaho Code section 67-6515A, a provision of the Local Land Use Planning Act (LLUPA).*fn3 This was based on the city attorney‟s opinion that language in section 67-6515A, listing conditions for allowing the transfer of development rights, was not meant to be exhaustive. Under the Ordinance, development rights could be transferred from designated sending sites to the owners of receiving sites willing to purchase those rights in exchange for restrictions on future development of the sending site. I.C. § 67-6515A; Ketchum City Code § 17.64.010.J. The Ordinance designated twenty-two sites that the City deemed eligible sending sites. Ketchum City Code § 17.64.010.J.12. The purchase of development rights by a receiving site allows the construction of a fourth floor on a structure because the purchased rights allow for an increased floor area ratio, meaning that a building on a receiving site can exceed the existing height limitation of 40 feet. Ketchum City Code § 17.64.010.J.7. Under the Ordinance, 260 First obtained approval to construct a four-story building, 50 feet in height, on its property located to the west of Copper Ridge. The proposed building, if constructed, will obstruct the view of Mount Baldy from KGF‟s penthouses, which has allegedly caused it to lose sales and forced it to lower sale prices.

KGF filed suit against the City, seeking a declaratory judgment that the Ordinance was void because it was not properly enacted under either Idaho Code section 67-6515A or the Preservation of Historic Sites Act (Preservation Act) and because it violated the uniformity requirement of Idaho Code section 67-6511. The City filed an answer and the parties subsequently stipulated that 260 First be allowed to intervene. KGF then moved for summary judgment. After extensive briefing and oral argument, the district court denied KGF‟s motion in an oral ruling, finding that the City was authorized to enact the Ordinance under its police power even if it was not explicitly authorized to do so by statute and that it did not violate the uniformity requirement. The district court, unsure of whether it had disposed of all the issues before it, issued a judgment dismissing the declaratory judgment action together with an I.R.C.P. 54(b) certificate.*fn4 KGF then appealed to this Court.

II. Issues Presented on Appeal

The following issues are presented on appeal: (1) whether the Ordinance is valid under Idaho Code section 67-6515A; (2) whether the Ordinance is violative of LLUPA‟s uniformity requirement; and (3) whether either party is entitled to attorney fees on appeal.

III.

A. Standard of Review

When reviewing the grant of a motion for summary judgment,*fn5 we apply the same standard used by the district court in ruling on the motion. Van v. Portneuf Med. Ctr., 147 Idaho 552, 556, 212 P.3d 982, 986 (2009). "Summary judgment is properly granted when "the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."‟ Id. (quoting Idaho R. Civ. P. 56(c)). The burden of demonstrating the absence of a genuine issue of material fact is on the moving party. Id.

We exercise free review over matters of statutory interpretation. State v. Doe, 147 Idaho 326, 327, 208 P.3d 730, 731 (2009). The purpose of statutory interpretation is to ascertain and "give effect to legislative intent." Id. at 328, 208 P.3d at 732. Statutory interpretation begins with the literal words of a statute, which are the best guide to determining legislative intent. Id. The words of a statute should be given their plain meaning, unless a contrary legislative purpose is expressed or the plain meaning creates an absurd result. Id. If the words of the statute are subject to more than one meaning, it is ambiguous and we must construe the statute "to mean what the legislature intended it to mean. To determine that intent, we examine not only the literal words of the statute, but also the reasonableness of proposed constructions, the public policy behind the statute, and its legislative history." Id. (quoting Hayden Lake Fire Protection Dist. v. Alcorn, 141 Idaho 388, 398--99, 111 P.3d 73, 83--84 (2005)).

B. LLUPA Authorization

KGF argues that the district court erred in entering judgment against it because the Ordinance does not fulfill any of the conditions for allowing TDRs under Idaho Code section 67-6515A. The City and 260 First argue that both the language and legislative history of this LLUPA provision give the City broad authority to protect "significant resources," which include the historic properties designated as sending sites by the Ordinance.

The language used in section 67-6515A does not indicate that the statute is intended to allow for the protection of historic properties. The relevant portion of Idaho Code section 67-6515A provides:

(1) Any city or county governing body may, by ordinance, create development rights and establish procedures authorizing landowners to voluntarily transfer said development rights subject to:

(a) Such conditions as the governing body shall determine to fulfill the goals of the city or county to preserve open space, protect wildlife habitat and critical areas, and enhance and maintain the rural character of lands with contiguity to agricultural lands suitable for long-range farming and ranching operations; and

(b) Voluntary acceptance by the landowner of the development rights and any land use restrictions conditional to such acceptance.

I.C. § 67-6515A(1) (emphasis added). While the respondents argue that this language is not preclusive, their argument is not supported by the statute‟s plain language.

The plain language of LLUPA does not allow it to be used to enact a TDR ordinance for historic preservation purposes. "It is a universally recognized rule of the construction that, where a constitution or statute specifies certain things, the designation of such things excludes all others," a maxim commonly known as expressio unius est exclusio alterius. Local 1494 of Int'l Ass'n of Firefighters v. City of Coeur d'Alene, 99 Idaho 630, 639, 586 P.2d 1346, 1355 (1978) (quoting Peck v. State, 63 Idaho 375, 380, 120 P.2d 820, 822 (1941)).

Idaho Code section 67-6515A(1)(a) does not use "including" or some similar term to indicate that development-rights transfers may be authorized for any specific goal of the municipality beyond those listed. Instead, section 67-6515A provides a specific and exhaustive list of the interests that will justify the enactment of a TDR ordinance. The plain language of the statute evidences an intent to preserve rural values, i.e. to preserve open spaces, wildlife habitat and critical areas, or agricultural land.*fn6

While the City is attempting to preserve a historic aspect of its landscape, it is not doing so under the terms of section 67-6515A. The record demonstrates that the City‟s express intention in enacting the Ordinance was to revitalize the downtown corridor while preserving historic buildings within that corridor. Because the City‟s focus is on buildings within the City itself, an urban focus, it is not acting in the rural context envisioned by the Legislature.*fn7 The urban focus is evident from the statement of purpose of the larger code section in which the Ordinance was codified. It provides:

Purpose: The purpose of the CC community core district is to promote a compact and cohesive center of commerce and culture, to promote an attractive and safe pedestrian environment which includes sidewalks, gathering spaces, streetscape amenities and landscaping, to retain the unique small town scale and character and to encourage buildings which respect Ketchum‟s historical and geographic context while providing diversity. The regulations of this chapter are intended to facilitate the implementation of the city's comprehensive plan and the Ketchum downtown master plan. Compatible mixed uses including retail, office, residential and cultural uses are encouraged. Commercial uses are concentrated in the [community core] district which is consistent with the city‟s comprehensive plan and the downtown master plan.

Ketchum City Code § 17.64.010.A (emphasis added). Further, neither the Ordinance nor the minutes of the committee meeting leading up to its adoption indicate any intention to preserve the rural character of the City. Any argument that rural or wildland character is preserved by the Ordinance is disingenuous because the Ordinance, as indicated by its statement of purpose, is solely focused on the City‟s community core district―a district that constitutes the urban center of the City. Accordingly, we find that the Ordinance was not validly enacted under Idaho Code section 67-6515A.

C. LLUPA Uniformity

KGF argues, and we agree, that the Ordinance conflicts with the uniformity requirement of LLUPA and is thus in violation of Article XII, § 2 of the Idaho Constitution, which prohibits cities from enacting laws in conflict with the State‟s general laws. The uniformity requirement is contained in Idaho Code section 67-6511 and it provides, in relevant part:

Within a zoning district, the governing board shall where appropriate, establish standards to regulate and restrict the height, number of stories, size, construction, reconstruction, alteration, repair or use of buildings and structures; percentage of lot occupancy, size of courts, yards, and open spaces; density of population; and the location and use of buildings and structures. All standards shall be uniform for each class or kind of buildings throughout each district.. (emphasis added).

Although we hold that the Ordinance is not authorized by Idaho Code section 67-6515A, the definitions in that section are informative as to the type of TDRs that the Legislature envisioned to be consistent with the uniformity requirement. Idaho Code section 67-6515A(8)(d) defines TDR as follows: ""Transfer of development rights‟ shall mean the process by which development rights are transferred from one (1) lot, parcel or area of land in any sending area to another lot, parcel or area of land in one (1) or more receiving areas." Consistent with Idaho Code section 67-6511‟s requirement that standards shall "be uniform for each class or kind of buildings throughout each district," this definition suggests that the owner of a sending area is foregoing the right to develop property in a certain fashion authorized by the relevant zoning ordinances in order to permit the owner of the receiving area to develop that property in a like fashion.

This common-sense reading of the statute is reinforced by the definition of "development rights," which are defined by Idaho Code section 67-6515A(8) as follows: "the rights permitted to a lot, parcel or area of land under a zoning or other ordinance respecting permissible use, area, density, bulk or height of improvements." In other words, "development rights" that may be transferred are those that are possessed by the transferring party.

The difficulty with the Ordinance is simply this: the "rights" that may be transferred under the Ordinance are not "rights" possessed by the sending site. Rather, the "development rights" defined by the Ordinance are synthetic creations authorizing sending site owners to transfer "rights" superior to the development rights they possess. That is, the property owners of sending sites do not have the right under the Ketchum scheme to develop the sending sites in a fashion permitted by the receiving sites. The effect of the TDR scheme created by the City is to allow receiving site property owners to purchase limited exemptions from the City‟s zoning regulations. This conflicts with the uniformity requirement of Idaho Code section 67-6511.

Ketchum City Code § 17.64.010 effectively limits the height of buildings in the City to three stories, except for hotels, community housing and planned unit developments. The findings contained in the Ordinance expressly recognize that "Four story buildings will be allowed with the purchase of TDRs." The findings minimize the impact of this deviation, explaining that "[b]uildings which employ TDRs to obtain additional height and square footage will be only slightly larger [than] neighboring buildings and should not appear oversized." It is evident the City contemplates that TDRs will be used to avoid the existing height restrictions, as the "Receiving Site Regulations" provide that "Receiving Sites shall include properties in the City of Ketchum where additional building height has been determined by the City Council to be advantageous to the City.." These regulations further provide that "[a] fourth floor may only be constructed on a designated receiving site and only through the transfer of development rights, except as provided for hotels." (Ketchum City Code § 17.64.010(I)(1) provides: "Hotels may build a fourth floor anywhere in designated receiving areas..") In essence, the Ordinance purports to convert horizontal development rights attached to sending sites into vertical development rights when transferred to receiving sites.*fn8

The Ordinance clearly reflects that sending sites may not construct buildings that would be permitted on a receiving site, with or without purchase of TDRs. For example, Ketchum City Code § 17.64.010(I)(2) states: "Without exception, hotels cannot build fourth or fifth floors in designated sending areas.." A sending site is prohibited from acquiring TDRs. Ketchum City Code § 17.64.010(J)(7)(b)(1). Finally, Ketchum City Code § 17.64.010(J)(7)(c) provides:

Affixing development rights through the process set forth herein allows the construction of a specified amount of floor area square footage on a fourth floor on a designated receiving site. A fourth floor may only be constructed on a designated receiving site and only through the transfer of development rights, except as provided for hotels. (emphasis added)

After careful review, there is one inescapable conclusion as to the purpose and effect of the Ordinance: it is designed to permit purchasers of TDRs to construct buildings taller than would otherwise be permitted. This conflicts with the uniformity requirement of Idaho Code section 67-6511, which of course is a general law of the State of Idaho. Because of such conflict, we must invalidate the Ordinance under Article XII, § 2 of the Idaho Constitution. Having done so, we need not consider the issues presented by the parties relative to the Preservation Act.

D. Attorney Fees

The City and KGF seek attorney fees on appeal under Idaho Code section 12-117. This Court will award attorney fees under section 12-117 when it finds that the non-prevailing party acted without basis in law or fact. Giltner Dairy, L.L.C. v. Jerome County, 145 Idaho 630, 633, 181 P.3d 1238, 1241 (2008). Under this standard, the City is not entitled to fees because it did not prevail. We also find that KGF is not entitled to attorney fees in this matter. The City has not acted without basis in fact or law, as we have not previously addressed the issues presented in this appeal.*fn9 Accordingly, neither party is entitled to attorney fees on appeal.

IV.

Because we find the Ordinance to be void, the district court‟s judgment is reversed. KGF is awarded its costs on appeal.

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